Labour MP for the Llanelli constituency

Tackling tax avoidance

Speaking in a Parliamentary debate called by Labour on tackling tax avoidance, Nia Griffith MP has criticised the Government’s record on tackling tax avoidance, and explained Labour’s plans to make tackling tax avoidance a priority for an incoming Labour Government.

Speaking in the debate, Nia said,

“ Nobody likes paying tax, but we all want our services, such as the NHS, to be there when we need them. Above all, we want fairness. We have an expectation that we should all pay our taxes, whoever we are. We want the same standards to be applied to all. It is damaging for honest businesses to face competition from corporations that are not paying the tax that they owe. Horrifying revelations about HSBC accounts in Switzerland have been made this week. Instead of its clients being encouraged to pay the tax that they owed, they were being issued with credit cards to enable them to spend the money without it being identified. That is utterly shameful behaviour on the part of the individuals and the banks, and how many more are there like them? Even more shocking is the fact that the Government were told about HSBC back in 2010, but nearly five years later only one of the 1,100 people involved in the tax irregularities has been prosecuted. That is disgraceful.

Cheating the Inland Revenue is never acceptable, but it is particularly galling when councillors up and down the country are agonising over how to manage their severely reduced budgets, and having to decide whether to cut help for special needs children or care for the elderly. My own indignation at the offshoring of the public money being used to pay private finance initiative debts led me to introduce a private Member’s Bill to stop our taxpayers’ money going offshore through those contracts. As some of the well-respected charities have pointed out, the amount of money that is lost to developing countries through companies offshoring accounts and therefore not paying their tax in those developing countries is three times the total global aid budget.

I am very concerned by the Government’s record to date. The amount of tax that is owed but has not been collected has risen from £31 billion to £34 billion in the past three years, and cuts to HMRC staff is exacerbating matters. The Prime Minister promised that he would lead on transparency in tax havens, but to date not one overseas territory or Crown dependency has produced a publicly accessible central register of beneficial ownership. The Government’s Swiss tax deal has raised less than a third of the £3.12 billion the Chancellor said it would raise in the 2012 autumn statement; the latest HMRC figures show that it has raised only £873 million.

To set the record straight, an authoritative study by the Financial Times of tax avoidance measures introduced under the Labour and Conservative governments has found that:

“Measures put in place by Labour during its 13 years in power to counter corporate tax avoidance are projected to raise ten times as much over the next four years as those introduced by the current coalition government.”Financial Times, 4 February, 2015

But we can never be complacent. That is why we are making it clear that an in-coming Labour government would make tackling tax avoidance and evasion a priority.

We would introduce meaningful penalties for those caught by the general anti-abuse rule, which currently lacks teeth. We would also close the loopholes that allow hedge funds to try to avoid stamp duty, and those that let companies move profits out of the UK to avoid corporation tax.

Also, very importantly, we would scrap the Government’s shares for rights scheme. WE oppose it because it amounts to immoral blackmail to ask workers to give up hard-won fundamental rights, but now it is also proving to be expensive because of the amount of HMRC inspectors’ time required to deal with the scheme. Paul Johnson of the Institute for Fiscal Studies has said of the shares for rights scheme that the

“government is trumpeting a new tax policy that looks like it will foster a whole new avoidance industry. Its own fiscal watchdog seems to suggest that the policy could cost a staggering £1 billion a year, and that a large portion of that could arise from ‘tax planning’”.

The Tory-LibDem Government’s record on tackling tax avoidance is poor, and that’s why an incoming Labour Government would make it a priority.